RFID in Retail Challenges and Perspectives

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RFID in RetailChallenges and Perspectives

• OCOVA Forum - Gap, September 22nd 2005

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Content

• RFID market projections
• Growth of RFID market
• Market projection per segment
• Key market drivers
• Retail
• Rationale for moving to RFID
• Deployment status
• Challenges
• Perspectives
• Conclusion

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RFID market projections
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RFID market projections Growth of RFID market

• Applied Business Intelligence
• RFID market worldwide will be worth US3.1
  billion by 2008
• IDC
• Spending on RFID retail supply chain systems
  alone will grow to US1.3 billion by 2008

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RFID market projectionsLow Frequency

• Low Frequency 125KHz (ISO11784)
• Animals tracking (15 years old)
• Access Control (15 years old)
• Automotive Immobilizer, Ctless Keys (10 years
  old)

Market Size About 120Mu-150Mu/year
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RFID market projectionsHigh Frequency

• High Frequency 13.56MHz (ISO14443 ISO15693)
• Contactless payment personal ID
• Mass Transit (5 years old)
• Passport (moving forward now) Secured documents
• Libraries books /media
• Lots of implementations worldwide (5 years old)
• Asset tracking
• Returnable Transit Container (5 years old)

Market Size 120-150Mu /year
Market Size 70-80Mu /year
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RFID market projectionsUltra High Frequency

• Ultra High Frequency 900MHz (ISO18000-6 a/b/c)
• Supply chain management
• Pallets cases traceability (2 years old)
• Airport luggage handling (2 years old)
• ST worldwide leader in 2005

Market Size 2005 2006 2007 500Mu 2Bu 10Bu
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Key Market DriversNorth America

• Legislation and mandates will drive RFID market

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Retail
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Rationale for moving to RFIDRetailer

• Reduce Out-of-stocks problem
• 8 average for retail
• 20 during promotion
• 69B for top 100 retailers
• Reduce theft
• RFID readers setting off alarms when installed at
  store doors
• Better inventory management
• Make the sale before the customer leaves the
  store
• Short shelf life products -gt reduce obsolete
  products

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Rationale for moving to RFIDManufacturer

• Better inventory management
• Short shelf life products -gt reduce obsolete
  products
• Better ability to respond to spikes in demand
• Warranty claims validation
• History of the product associated with the tags
  unique serial number in database
• Identify hot selling items quicker
• Manufacturer saves time and resources by speeding
  production of hot selling items

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Deployment statusin Europe

• Half of companies surveyed have or planning to
  deploy RFID
• Majority to start implementation within next 3
  years

Source RFID Benchmark Study 2004, LogicaCMG
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Deployment statusin North America

• ST main RFID chip supplier for Wal-Mart
  application
• 140 stores
• Portal readers installed at the receiving doors
• Doorways between the back room of these stores
  and the retail floor
• Source RFID Journal - March/April 2005
• Pilots at BestBuy, Target and DOD

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ChallengesGlobal Standardization

• Current frequencies in use
• North America 902-928MHz
• Europe/Singapore 866-869MHz
• Japan 950-956MHz

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ChallengesTags and readers unit price evolution

• Falling prices on tags and readers

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Challenges

• Tag costs
• Interoperability
• Items encased in metal
• Items containing liquid
• RFID Privacy Policy

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Perspectives
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Perspectives SCS Pole Projects

• Health and pharmaceutical
• Partnership with PACA local actors
• Logistics and Retails
• Mobility micro payment
• gt Project proposal to be submitted by 4Q05 to
  French government PAC-ID

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Perspectives Other Projects

• Health and pharmaceutical
• FDA 2007
• Logistics and Retail
• High-tech manufacturing
• Consumer packaged goods manufacturing

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PerspectivesItem level tagging

• Pharmaceuticals
• Against frauds/counterfeiting
• UHF or HF technology
• High value goods
• Against frauds/ counterfeiting
• UHF or HF technology

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Conclusion
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Conclusion

• STMicroelectronics is the worldwide leader in UHF
  RFID ICs
• Worldwide 1 supplier of EPC Class1 Generation1
• Several 100Munits shipped each quarter
• Unmatched UHF RFID chips manufacturing experience
  already able to produce several Billion units
  C1G1 chips per year
• STMicroelectronics is committed and ready!
• we believe EPC products will replace bar code
• C1G2 XRAG2 sampling in the coming days
• Challenges remain
• Cost of the solution (infrastructure/readers/label
  s)
• Compliance tests / Interoperability
• Worldwide adoption of the EPC technology

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